How's this for ridiculously long odds: last year's biggest paycheck for the head of a Las Vegas-based public company went to the CEO of a pharmaceuticals maker.
Spectrum Pharmaceuticals Inc., which quietly shifted its headquarters from Irvine, Calif., to Henderson early last year, rewarded CEO Rajesh Shrotriya with a package valued at $25.2 million. The maker of cancer therapies posted its first profits since the company started under a different name in 1987.
That doesn't mean Shrotriya will see it all as take-home pay. Spectrum's proxy statement noted that $14.1 million came as restricted stock that hinges on future performance. If Spectrum should falter, the value could go to zero.
Spectrum has grown rapidly, from $7.7 million in sales in 2007 to $193 million last year. It had 176 employees at year's end, including 11 medical doctors and eight people with doctorates, but the company didn't list the size of its Henderson office.
Before anyone proclaims "mission accomplished" on achieving the longtime mantra of a diversified local economy, the other 15 people that made the Las Vegas Review-Journal's annual Sweet 16 roster of top-paid CEOs were tied either to the gaming industry or to utilities. Not surprisingly, perhaps the most eye-popping number came from the valley's longtime economic core.
With a takeover fight threatened by former director and top shareholder Kazuo Okada, and court battles already under way, Wynn Resorts Ltd. boosted the cost of CEO Steve Wynn's golden parachute to $258.4 million. Officially called "termination without cause or for good reason after change in control," the severance promise includes what amounts to 12 years of salary and bonus at $180.8 million, $77.2 million to cover taxes and $418,000 for health benefits.
In 2010, before the emergence of the Okada threat, Wynn's golden parachute totaled $195 million.
Last year, Michael Leven of Las Vegas Sands Corp. reeled in the biggest payday among senior executives, but he was not included on the list because he is the president; Sheldon Adelson is CEO. Not only did Leven's annual compensation nearly double to $23.5 million, but he reaped another $71.4 million by cashing in stock options granted when he took the job three years ago during the pit of the recession.
Overall, 14 of the CEOs received a raise last year, many in the form of stock or options that cannot be sold until future dates. Many companies have held salaries to one-fourth or less of total compensation, while the cash bonus has almost disappeared.
At the same time, the shares in six of the 13 exchange-traded companies finished the year lower than they started - a critical measure because shareholders have long been told that high executive pay is tied to performance, and this aligned with shareholder interests.
"Companies have taken a number of baby steps in reforming the worst excesses," said Brandon Rees, deputy director of the AFL-CIO's office of investment and a frequent critic of executive pay. "But in an overall sense, there is absolutely no improvement."
The Las Vegas companies have generally designed plans that hold a CEO's salary to one-fourth or less of total pay, with the rest contingent on numerous measures tied to stock and company performance.
Still, executive pay critics have frequently complained that CEO pay has risen even if shareholders suffered or encouraged reckless management to hit the bonus targets. Also, labor groups have argued that the pay gap between the front office and the front counter has continually widened.
But Patrick McGurn, executive vice president of the advisory firm Investor Shareholder Services, said new federal laws requiring advisory votes by shareholders on executive pay have already influenced behavior.
"We are definitely seeing changes in both the transparency of disclosure and company pay practices since the start of 'say on pay,' " he said.
In the current annual meeting season, a majority of shareholders voted their disapproval of pay policies at eight companies nationwide compared with 382 approvals, McGurn said. Many of the approval votes topped 80 percent.
In Las Vegas, say on pay prompted a cool response at two annual meetings late last year. At International Game Technology, 56 percent of the shares that voted disapproved of the company's pay policies. Shareholders at Bally Technologies went 57 percent in favor of the company; by contrast, two Bally directors on the same ballot each received more than 90 percent of the vote. Further, a majority of Bally shareholders voted for annual pay reviews instead of less frequent intervals.
Most local companies will stage their annual meetings in the next few weeks.
But companies now go to great lengths to explain how they arrived at pay numbers, including charts, detailed guidelines and benchmarks with other companies. For example, MGM Resorts International devoted 29 pages to executive pay, compared with just three in 2005.
Highlights from the local proxies include:
■ Caesars Entertainment Corp. last year started the Customer Service Jackpot, awarding a bonus of 5 percent of base salary for a 6 percent swing in customer service satisfaction ratings to "A" from lower grades.
Also, Caesars lowered the exercise price on many stock options to $20.09. Previously, they had ranged from $25 to $100, a benefit to top executives.
■ MGM Resorts in April a started a requirement that CEO Jim Murren hold stock with a market value at least five times higher than his salary, now at $2 million a year. There's no defined timetable, but he must retain at least half of the after-tax bonus shares and what he acquires through exercising options until he reaches the current target of $10 million. The qualifying shares he held as of April were worth about $3 million.
IN OTHER HIGHLIGHTS:
■ Allegiant Travel Co. CEO Maurice Gallagher Jr., who has long refused a salary, also turned down all other pay this year except for $157,000 in stock options. He is the airline's largest stockholder, with 3.9 million shares valued at $242 million.
■ Starting next month, the severance packages for Southwest Gas Corp. CEO Jeffrey Shaw will shrink 20 percent to 34 percent, depending on the circumstance. This results in part from eliminating the tax compensation, known as a gross up, that has been a particular target of corporate pay critics. The Wynn gross up, by contrast, could run $77.2 million.
■ Boyd Gaming Corp., with a couple of exceptions, continued a three-year salary freeze and lowered bonus payments. However, CEO Keith Smith had raises in other categories and came out ahead, overall.
■ Three casino CEOs - Murren, Gary Loveman of Caesars Entertainment and Sheldon Adelson of Las Vegas Sands - now have security escorts as part of their compensation package.
Contact reporter Tim O'Reiley at email@example.com or 702-387-5290.